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Posted by ew1077 on February 10, 2007, 7:03 am
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I just purchased a land for $165,000. My broker got $4,025
commission and cut me a business check for $1,650 as a
"thank-you". I imagine she will deduct $1,625 from her
original income. Does it mean I have to report it to IRS as
income on my tax return and pay taxes on it? She claims I
can treat it as a gift and don't have to report on tax
return. Can I trust her? Does she have to send me a
1099-misc at the end of the year? She claims she's been
sharing her commission with clients for years, never send
1099-misc, and none of them had any problems with IRS.
Please let me know. I haven't cashed her check yet but
could definitely use the money.
Thanks!!!
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Posted by PeterL on February 12, 2007, 1:01 am
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ew1...@yahoo.com wrote:
> I just purchased a land for $165,000. My broker got $4,025
> commission and cut me a business check for $1,650 as a
> "thank-you". I imagine she will deduct $1,625 from her
> original income. Does it mean I have to report it to IRS as
> income on my tax return and pay taxes on it? She claims I
> can treat it as a gift and don't have to report on tax
> return. Can I trust her? Does she have to send me a
> 1099-misc at the end of the year? She claims she's been
> sharing her commission with clients for years, never send
> 1099-misc, and none of them had any problems with IRS.
> Please let me know. I haven't cashed her check yet but
> could definitely use the money.
If she deducts it as business expense, then it's not a gift.
Gift cannot be deducted.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by A.G. Kalman on February 12, 2007, 1:01 am
Please log in for more thread options ew1077@yahoo.com wrote:
> I just purchased a land for $165,000. My broker got $4,025
> commission and cut me a business check for $1,650 as a
> "thank-you". I imagine she will deduct $1,625 from her
> original income. Does it mean I have to report it to IRS as
> income on my tax return and pay taxes on it? She claims I
> can treat it as a gift and don't have to report on tax
> return. Can I trust her? Does she have to send me a
> 1099-misc at the end of the year? She claims she's been
> sharing her commission with clients for years, never send
> 1099-misc, and none of them had any problems with IRS.
> Please let me know. I haven't cashed her check yet but
> could definitely use the money.
If she is actually sharing commissions, then anyone who
receives a payment from her does have commission income and
must report it as taxable gross income. It wouldn't matter
whether she sends or doesn't send the 1099. If on the other
hand she is merely saying thank you, then it is a gift and
does not have to be reported as income.
As to her tax return: if she is sharing commissions, then
she would only report her net (gross less the amount shared)
commission as income on her business tax return. If she is
making a gift, then she would report her gross commission
and get no tax deduction for the gift to an individual.
--
Alan
http://taxtopics.net
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Harlan Lunsford on February 12, 2007, 1:01 am
Please log in for more thread options ew1077@yahoo.com wrote:
> I just purchased a land for $165,000. My broker got $4,025
> commission and cut me a business check for $1,650 as a
> "thank-you". I imagine she will deduct $1,625 from her
> original income. Does it mean I have to report it to IRS as
> income on my tax return and pay taxes on it? She claims I
> can treat it as a gift and don't have to report on tax
> return. Can I trust her? Does she have to send me a
> 1099-misc at the end of the year? She claims she's been
> sharing her commission with clients for years, never send
> 1099-misc, and none of them had any problems with IRS.
> Please let me know. I haven't cashed her check yet but
> could definitely use the money.
What is it with these real estate people these day?
It is not income to you, but simply a reduction in your
purchase price. Don't worry about it. If she does send you
a 1099misc send it back to her (a copy of course) and say
"no thank you".
And if IRS ever later questions you on it, respond and
document the facts.
One aspect of this pertaining to the realtor might be the
"gift" aspect, for business gifts are subject to a 25$ limit
as a business deduction. But she won't bother with that,
I'm sure.
ChEAr$,
Harlan Lunsford, EA n LA
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Seth Breidbart on February 12, 2007, 1:01 am
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> I just purchased a land for $165,000. My broker got $4,025
> commission and cut me a business check for $1,650 as a
> "thank-you". I imagine she will deduct $1,625 from her
> original income. Does it mean I have to report it to IRS as
> income on my tax return and pay taxes on it?
I think it's a reduction in the cost (basis) of the property.
Seth
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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